Monthly Archives: July 2019

External Commercial Borrowings

Gist of RBI circular dated 30th July, 2019 on the subject.

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to paragraphs 2.1.(v) and 2.1.(viii) of Master Direction No.5 dated March 26, 2019 on the above subject in terms of which, inter alia, ECB proceeds cannot be utilised for working capital purposes, general corporate purposes and repayment of Rupee loans except when the ECB is availed from foreign equity holder for a minimum average maturity period of 5 years. Further, on-lending for these activities out of ECB proceeds is also prohibited.

2. Based on the feedback from stakeholders and with a view to further liberalise the ECB framework, it has been decided, in consultation with the Government of India, to relax the end-use restrictions. Accordingly, eligible borrowers will now be permitted to raise ECBs for the following purposes from recognised lenders, except foreign branches/ overseas subsidiaries of Indian banks, subject to paragraph 2.2 of the direction ibid:

  1. ECBs with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes. Borrowing by NBFCs for the above maturity for on lending for the above purposes is also permitted.
  2. ECBs with a minimum average maturity period of 7 years can be availed by eligible borrowers for repayment of Rupee loans availed domestically for capital expenditure as also by NBFCs for on-lending for the same purpose. For repayment of Rupee loans availed domestically for purposes other than capital expenditure and for on-lending by NBFCs for the same, the minimum average maturity period of the ECB is required to be 10 years.
  3. It has been decided to permit eligible corporate borrowers to avail ECB for repayment of Rupee loans availed domestically for capital expenditure in manufacturing and infrastructure sector if classified as SMA-2 or NPA, under any one time settlement with lenders. Lender banks are also permitted to sell, through assignment, such loans to eligible ECB lenders, except foreign branches/ overseas subsidiaries of Indian banks, provided, the resultant external commercial borrowing complies with all-in-cost, minimum average maturity period and other relevant norms of the ECB framework.

3. The prescribed minimum average maturity provision, as above, for the aforesaid end-uses will have to be strictly complied with under all circumstances.

4. All other provisions of the ECB policy remain unchanged. AD Category – I banks should bring the contents of this circular to the notice of their constituents and customers.

5. The Master Direction No. 5 dated March 26, 2019 is being updated to reflect the above changes.

6. The directions contained in this circular have been issued under section 10(4) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

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Code on Wages Bill 2019

PIB press release dated 30th July, 2019

The Lok Sabha today passed The Code on Wages Bill, 2019. While opening the discussion for consideration and passing of the Bill,  Minister of State (I/C) for Labour and Employment Shri Santosh Kumar Gangwar said that it is a historic Bill which aims to transform the old and obsolete labour laws into more accountable and transparent ones which is need of the hour. As many as 17 present labour laws are more than 50 years old and some of them even belong to pre-independence era.

Among the four Acts being subsumed in The Code on Wages Bill, The Payment of Wages Act, 1936 belongs to pre-independence era and The Minimum Wages Act 1948 is also 71 years old. The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976 are also being subsumed in the Code.

He further said that wide consultations were held with trade unions, employers and State governments and tripartite consultations were held on 10th March, 2015 and 13th April, 2015. A draft of Wage Code was made available in public domain through Ministry’s website. Many persons gave their valuable suggestions. The Bill was introduced in last Lok Sabha on 10 August, 2017 and was referred to Parliamentary Standing Committee which submitted its Report on 18th December 2018. Out of 24 recommendations made by standing committee, 17 were accepted by government.

He further said that the Code ensures minimum wages along with timely payment of wages to all the employees and workers. Many unorganized sector workers like agricultural workers, painters, persons working in restaurants and dhabas, chowkidars etc. who were out of the ambit of minimum wages will get legislative protection of minimum wages after the bill becomes an Act. It has been ensured in the bill that employees getting monthly salary shall get the salary by 7th of next month, those working on weekly basis shall get the salary on last day of the week and daily wagers should get it on the same day.

He expressed hope that The Code on Wages will prove to be a milestone and give respectable life to 50 crore unorganized sector workers. The Minister responded to the debate in detail and thanked all the respected members for cooperation in passing the Bill.

The salient features of the Code are as following:

• The Code on Wage universalizes the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling. At present, the provisions of both Minimum Wages Act and Payment of Wages Act apply on workers below a particular wage ceiling working in Scheduled Employments only. This would ensure “Right to Sustenance” for every worker and intends to increase the legislative protection of minimum wage from existing about 40% to 100% workforce. This would ensure that every worker gets minimum wage which will also be accompanied by increase in the purchasing power of the worker thereby giving fillip to growth in the economy. Introduction of statutory Floor Wage to be computed based on minimum living conditions, will extend qualitative living conditions across the country to about 50 crore workers. It is envisaged that the states to notify payment of wages to the workers through digital mode.

• There are 12 definitions of wages in the different Labour Laws leading to litigation besides difficulty in its implementation. The definition has been simplified and is expected to reduce litigation and will entail at lesser cost of compliance for an employer. An establishment will also be benefited as the number of registers, returns, forms etc., not only can be electronically filed and maintained, but it is envisaged that through rules, not more than one template will be prescribed.

• At present, many of the states have multiple minimum wages. Through Code on Wages, the methodology to fix the minimum wages has been simplified and rationalised by doing away with type of employment as one of the criteria for fixation of minimum wage. The minimum wage fixation would primarily based on geography and skills. It will substantially reduce the number of minimum wages in the country from existing more than 2000 rates of minimum wages.

• Many changes have been introduced in the inspection regimes including web based randomised computerised inspection scheme, jurisdiction-free inspections, calling of information electronically for inspection, composition of fines etc. All these changes will be conducive for enforcement of labour laws with transparency and accountability.

• There were instances that due to smaller limitation period, the claims of the workers could not be raised. To protect the interest of the workers, the limitation period has been raised to 3 years and made uniform for filing claims for minimum wages, bonus, equal remuneration etc., as against existing varying period between 6 months to 2 years.

• It can be said that a historical step for ensuring statutory protection for minimum wage and timely payment of wage to 50 crore worker in the country has been taken through the Code on Wages besides promoting ease of living and ease of doing business.

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Consumer Protection Bill 2019

PIB press release dated 30th July, 2019

The Lok Sabha today passed the Consumer Protection Bill 2019 after due consideration and discussion.The Union Minister for Consumer Affairs, Food and Public Distribution Shri Ram Vilas Paswan said that the bill aims at protecting the interests of consumers by establishing authorities for timely and effective administration and settlement of consumers’ dispute. Moving the Bill, Minister of State for Consumer Affairs, Food and Public Distribution, Shri Raosaheb Patil Danve said the Bill aims to simplify a number of rules. Shri Danve said consumers do not get quick redressal of their complaints and with the passage of the Bill, consumers will be able to get speedy justice. He said the government aims to simplify the entire process of redressal of consumer grievances.

Under the Bill, there is provision for central government to set up a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers and will be empowered to investigate, recall, refund and impose penalties. It will regulate matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. There is also a provision for class action law suit for ensuring that rights of consumers are not infringed upon. The authority will have power to impose a penalty on a manufacturer or an endorser of up to 10 lakh rupees and imprisonment for up to two years for a false or misleading advertisement.

Salient Features of the Bill

1.         Central Consumer Protection Authority (CCPA): Executive Agency to provide relief to a class of consumers. The CCPA will be empowered to-

  1. Conduct  investigations into violations of consumer rights and institute Complaints /Prosecution
  2. Order recall of unsafe goods and services
  3. Order discontinuance of Unfair Trade Practices and Misleading  Advertisements
  4. Impose penalties on Manufactures /Endorsers /Publishers of Misleading Advertisements

2.         Simplified Dispute Resolution process

i) Pecuniary Jurisdiction enhanced to-

  • District Commission –Up to Rs1 crore
  • State Commission- Between  Rs1 crore and Rs 10 crore
  • National Commission –Above Rs.10 crore

ii) Deemed admissibility after 21days of filing

iii) Empowerment of Consumer Commission to enforce their orders

iv) Appeals only on question of law after second stage

v) Ease of approaching consumer commission

  • Filing from place of residence
  • E-filing
  • Videoconferencing for hearing

3.         Mediation

  • An Alternate Dispute Resolution (ADR) mechanism
  • Reference to Mediation by Consumer Forum wherever scope for early settlement exists and parties agree for it.
  • Mediation cells to be attached to Consumer Forum
  • No appeal against settlement through mediation

4.         Product Liability

A manufacturer or product service provider or product seller to be responsible to compensate for injury or damage caused by defective product or deficiency in services

The Basis for product liability action will be:

  • Manufacturing  defect
  • Design defect
  • Deviation from manufacturing specifications
  • Not conforming to express warranty
  • Failing to contain adequate instruction for correct use
  • Services provided arefaulty, imperfect or deficient

New Bill- Benefit to Consumers

Presently Consumer only have a single point of access to justice, which is time consuming. Additional swift executive remedies are proposed in the bill through Central Consumer Protection Authority (CCPA)

Deterrent punishment to check misleading advertisements and adulteration of products

Product liability provision to deter manufacturers and service providers from delivering defective products or deficient services

Ease of approaching Consumer Commission and Simplification of Adjudication process

Scope for early disposal of cases through mediation

Provision for rules for new age consumer issues: e-commerce & direct selling

 

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Unbreakable – MC Mary Kom

mary kom

Brilliant, absolutely brilliant autobiography of one of India’s most famous sports MC Mary Kom. Written in an endearingly simple narrative, the autobiography talks to you so beautifully. Her struggles in a poor family, lack of resources, lack of training facilities, unknown sport, language troubles, food troubles, Mary takes it all in her chin and fights her way to glory. Mary’s life is that of a simple unknown athlete who rose to her fame through sheer grit, determination and hard work. “Look at me. I am a nobody who became a sporting icon only because of my consistent hard work”

Mary Kom is the only champion to win the World Championships a record 6 times and has a medal in all the 7 World Championships.  She is the only Indian woman boxer to have qualified for the 2012 Summer Olympics in London, competing in the flyweight (51 kg) category and winning the bronze medal. She became the first Indian woman boxer to get a Gold Medal in the Asian Games in 2014 at Incheon, South Korea and is the first Indian woman boxer to win gold at the 2018 Commonwealth Games.

Probably the best sports autobiography that i have read in a long time after that of Bill Rogers’ “Marathon Man” and “Letters to a young Gymnast” by Nadia Comaneci.

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Multi-system operators

TRAI press release dated 22nd July, 2019

New Delhi: 22nd July 2019- The Telecom Regulatory Authority of India (TRAI) has today released its recommendations on “Entry level Net-worth requirement of Multi System Operators (MSOs) in Cable TV Services”. A Multi System Operator (MSO) is an authorized service provider, providing cable TV services to its subscribers. The Rule 11(3) of Cable Television Network Rules, 1994 prescribes the criteria of the applicant for grant of MSO registration.
2. In this regard, a reference was received from Ministry of Information and Broadcasting (MIB) vide its letter dated 16th May, 2018 seeking recommendations of TRAI on the appropriate levels for fixation of entry level net-worth of the Multi System Operators (MSOs) for operationalizing cable TV digitization across the country. Further details of the reference were shared by MIB vide its letter dated 13thDecember 2018.
3. In order to deliberate on various aspects related to the matter and to seek inputs from the industry stakeholders on relevant issue, the Authority issued a detailed Consultation paper on “Entry Level Net Worth for MSOs in Cable TV Services”, on 9thApril 2019. Subsequently, an open house discussion was held on 11thJune 2019, in Delhi, to seek the further views of the stakeholders on various issues.
4. Based on the comments of the stakeholders received during the above-mentioned
consultation process and its own analysis, the Authority has finalized its recommendations on “Entry Level Net Worth requirement for MSO in Cable TV Services”. The Authority has noted that the New Regulatory Framework provides an enabling environment for Small and Medium MSOs and up scaling of LCOs to MSO. To highlight the measures that enable small and medium MSOs the Authority has published a white-paper on ‘Benefits of the New Framework for Small MSOs'(https://main.trai.gov.in/sites/ default/files/WhitePaper 23042019.pdf) in April 2019.
5. After careful consideration the Authority has recommended that,’ … there is no necessity for fixation of a minimum entry level net worth for MSO registration. As at present, any individual, company, Corporate firm or LLP that fulfils provisions of the Cable TV Rules may be granted MSO registration.

6. The full text of the recommendations is available on TRAI’s website: http://www.trai.gov.in. For any clarification/information, Shri Ani! Kumar Bhardwaj, Advisor (B&CS)-II may be contacted at Tel. No. +91-11-23237922.

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Liquidity Enhancement scheme

SEBI circular dated 26th July, 2019

1. SEBI vide circular SEBI/HO/CDMRD/DMP/CIR/P/2018/55 dated March 26, 2018
had issued guidelines for LES in Commodity Derivatives Contracts subject to
certain conditions stipulated vide Circular No. CIR/MRD/DP/14/2014 dated April
23, 2014.
2. The manner in which exchanges can provide LES under the extant circular No.
CIR/MRD/DP/14/2014 dated April 23, 2014 is as under:
‘5.1. Discount in fees, adjustment in fees in other segments or cash payment –
The incentives during a financial year shall not exceed 25% of the
net profits or 25% of the free reserves of the stock exchange, whichever
is higher, as per the audited financial statements of the preceding financial
year.
5.2. Shares, including options and warrants, of the stock exchange – The
shares that may accrue on exercise of warrants or options, given as
incentives under all liquidity enhancement scheme, during a financial
year, shall not exceed 25% of the issued and outstanding shares of
the stock exchange as on the last day of the preceding financial year.
Further, the stock exchange shall ensure that this is in compliance with
the Securities Contracts (Regulation) (Stock Exchanges and Clearing
Corporations) Regulations, 2012 at all times.’
3. An exchange in early years of its formation/commencement of business may not
be able to generate profits or have free reserves from business operations. In this
regard, it has now been decided to exempt such exchanges, during their first five
years of operation from the date of SEBI’s approval for commencement /
recommencement of their business, from the applicability of clauses 5.1 and 5.2
of said SEBI circular No. CIR/MRD/DP/14/2014 dated April 23, 2014, subject to
adherence to the following conditions:
3.1.The yearly incentives that such an exchange can earmark for LES shall not
exceed 25% of the audited net-worth of the said exchange as on the last day
of the previous financial year.
3.2.Such exchange shall create a reserve specifically to meet its LES
incentives/expenses and transfer funds to such reserve accordingly. However,
such reserves shall not be included in the calculation of Exchange net worth.
3.3.Such exchange however shall continuously comply with the minimum networth requirement as per Securities Contracts (Regulation) (Stock Exchanges
and Clearing Corporations) Regulations, 2018.
4. The provisions of this circular shall be effective from the date of this circular.
5. This circular is issued in exercise of powers conferred under Section 11 (1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
6. Exchanges are advised to:
i. make necessary amendments to the relevant bye-laws, rules and regulations.
ii. bring the provisions of this circular to the notice of the stock brokers of the
Exchange and also to disseminate the same on their website.
iii. communicate to SEBI, the status of the implementation of the provisions of this
circular
7. This circular is available on SEBI website http://www.sebi.gov.in under the category
“Circulars” and “Info for Commodity Derivatives”.

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Commodities futures contracts

SEBI circular dated 26th July, 2019

1. SEBI vide circular SEBI/HO/CDMRD/DRMP/CIR/P/2016/90 dated September 21,
2016 had inter-alia specified the staggered delivery framework for commodity
futures contracts. The applicable staggered delivery periods for various commodity
futures contracts as on the date of the above circular were also continued. It is
observed that currently there is no uniformity in the length of staggered delivery
period for commodity futures contracts across exchanges even for the same
commodities.
2. Based on the representations received from exchanges and deliberations thereon,
following revised norms for staggered delivery {replacing the norms with respect
to the staggered delivery (para 3(a)) prescribed vide circular dated September 21,
2016} are prescribed:
2.1.Definition: Staggered delivery period is the period, beginning few working days
prior to expiry of any contract and ending with expiry, during which
sellers/buyers having open position may submit an intention to give/take
delivery.
2.2.All compulsory delivery commodity futures contracts (agriculture commodities
as well as non-agriculture commodities) shall have a staggered delivery
period.
2.3.The minimum duration of staggered delivery period shall be at least five
working days.
2.4.Exchanges shall have the flexibility to set higher duration of staggered delivery
period for any commodity futures contract, as deemed fit, taking into account
various factors such as historical open interest, volume near expiry etc… In
this regard, for the benefit of the market participants, all the exchanges shall
jointly prepare and publish a detailed framework outlining various
circumstances and factors which would generally require longer duration of
staggered delivery period in any commodity.
2.5. In the interest of trade and public, SEBI or exchange may exercise its
due discretion in modifying the aforesaid staggered delivery period at any
time.
2.6.Framework:
 Seller/buyer having open position shall have an option, of submitting an
intention of giving/taking delivery, on any day during the staggered delivery
period.
 On each day (except for the expiry day), Exchange shall allocate intentions
received to give delivery during the day, to buyers having open long position
as per random allocation methodology to ensure that all buyers have an
equal opportunity of being selected to receive delivery irrespective of the
size or value of the position. However, preference may be given to buyers
who have marked an intention of taking delivery, which may be based on
aspects such as location, quality etc…
 Pay-in and pay-out for the allocated deliveries shall happen within 2 working
days after allocation.
 All open positions after expiry of the contract shall result in compulsory
delivery and be settled at Final Settlement Price (FSP) of the respective
contract and pay-in and pay-out shall happen latest by the 2nd working day
after expiry.
2.7.Exchanges shall start imposing pre-expiry margin (as prescribed vide SEBI
circular CIR/CDMRD/DRMP/01/2015 dated October 01, 2015) latest by the
start of the staggered delivery period.
3. To comply with the provisions of this circular, Exchanges shall appropriately modify
the contract specifications (if required) and implement the changes in all contracts
(whether running or yet to be launched) expiring after three months from the date
of this circular.
4. This circular is issued in exercise of powers conferred under Section 11 (1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
5. Exchanges are advised to:
i. to make necessary amendments to the relevant bye-laws, rules and
regulations.
ii. bring the provisions of this circular to the notice of the stock brokers of the
Exchange and also to disseminate the same on their website.
iii. communicate to SEBI, the status of the implementation of the provisions of this
circular
6. This circular is available on SEBI website http://www.sebi.gov.in under the category
“Circulars” and “Info for Commodity Derivatives”.

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Public issues – mobile app or UPI

SEBI circular dated 26th July, 2019

1. This refers to SEBI circular No. SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated
November 1, 2018, vide which SEBI had introduced the use of Unified Payments
Interface (UPI) as a payment mechanism with Application Supported by Block
Amount (ASBA) for applications in public issues by retail individual investors
through intermediaries (Syndicate members, Registered Stock Brokers, Registrar
and Transfer agent and Depository Participants), with effect from January 1, 2019.
Implementation of the same was to be carried out in a phased manner to ensure
gradual transition to UPI with ASBA.

Implementation of Phase II
2. Accordingly, Phase II of the aforesaid Circular dated November 01, 2018 has
become effective from July 1, 2019. Thereafter, for applications by retail individual
investors through intermediaries, the existing process of, investor submitting bid cum-application form with any intermediary along with bank account details, and
movement of such application forms from intermediaries to Self-Certified
Syndicate Banks (SCSBs) for blocking of funds, has been discontinued i.e.
Channel III at Para 5.1 of Circular dated November 01, 2018 has been
discontinued. For such applications only the UPI mechanism would be the
permissible mode i.e.Channel IV at Para 5.1 of the said Circular.

Status of SCSBs on UPI

3. Applications through UPI in IPOs can be made only through the SCSBs / mobile
applications (apps) whose name appears on the SEBI website – http://www.sebi.gov.in
at the following path:
Home » Intermediaries/Market Infrastructure Institutions » Recognised
Intermediaries » Self Certified Syndicate Banks eligible as Issuer Banks for UPI
A list of SCSBs and mobile application, which, as on the date of this Circular, are
live for applying in public issues using UPI mechanism is provided at Annexure ‘A’.
The said list shall be updated on SEBI website.
An investor shall ensure that when applying in IPO using UPI, the name of his
Bank appears in the list of SCSBs displayed on the SEBI website which are live
on UPI.
Further, he/she shall also ensure that the name of the app and the UPI handle
being used for making the application is also appearing in the aforesaid list.

4. An application made using incorrect UPI handle or using a bank account of an
SCSBs or bank which is not mentioned in the aforesaid list is liable to be rejected.

5. Investors whose bank is not live on UPI as on the date of this Circular, may use
the other alternate channels available to them viz. submission of application form
with SCSB or using the facility of linked online trading, demat and bank account
(Channel I or II at Para 5.1 of Circular dated November 01, 2018).

6. Frequently asked questions (FAQs) regarding use of UPI with ASBA in public issue
process can be accessed at the following path on the SEBI website –
http://www.sebi.gov.in :
Home » FAQs » FAQs on Primary Market Issuances » Use of Unified Payments
Interface (UPI) with ASBA in public issue process

7. All entities involved in the process are advised to take necessary steps to ensure
compliance with this circular.

8. This circular is being issued in exercise of the powers under section 11 read with
section 11A of the Securities and Exchange Board of India Act, 1992.

9. This circular is available on SEBI website at http://www.sebi.gov.in under the categories
“Legal Framework” and “Issues and Listing”.

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Fitness testing of vehicles

PIB press release dated 26th July, 2019

The Ministry of Road Transport & Highways has issued a draft notification for amendments to the Central Motor Vehicles Rules for providing a boost to electric vehicles, ensuring divyang friendly features in buses, and providing an enabling mechanism for scrapping of vehicles older than 15 years

The renewal of certificate of fitness in respect of transport vehicles older than 15 years has been proposed to be conducted every six months from the current requirement of testing once a year

  • In addition, the fees have been increased further for conducting fitness test and grant and renewal of certificate of fitness for motor vehicles older than 15 years.

Priority seats, signs, securing of crutches/ canes/ walkers, hand rail/ stanchions, controls at priority seats and wheel chair entry/ housing/ locking arrangement for wheel chair for Divyangjan (Differently Abled passengers or passengers with reduced mobility) to be checked and ensured at the time of Fitness Inspection for buses has been introduced.

Battery Operated Vehicles will be exempted from the payment of fees for the purpose of issue or renewal of registration certificate and assignment of new registration mark. This was already issued earlier, but has been published again for legislative clarity for the amendments.

The notification also provides that newly purchased motor vehicles will be exempted from the payment of fees for the purpose of issue of registration certificate and assignment of new registration mark subject to condition that the motor vehicle is presented for the registration along with the SCRAPPING CERTIFICATE of the previously owned vehicle of same category issued by the authorised scrapping centre/agency and the scrapping certificate has not been utilised for any other such cases in past.

Fees have been revised for renewal of certificates of registration and assignment of new registration mark

The draft notification has been issued seeking comments and suggestions from stakeholders.

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IBBI amendments

PIB press release dated 26th July, 2019

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 and the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 today.

The salient amendments affected by the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 are:

(a) The amendments specify the process for withdrawal of applications before constitution of committee of creditors (CoC), after constitution of CoC but before issue of invitation for expression of interest, and after issue of invitation for expression of interest.

(b) The amendments require that while approving a resolution plan or deciding to liquidate the corporate debtor, the CoC may:

(i) approve a plan providing for contribution for meeting the liquidation costs,

(ii) recommend sale of the corporate debtor or sale of business of the corporate debtor as a going concern, and

(iii) fix, in consultation with the RP, the fee payable to the liquidator, if an order for liquidation is passed by the Adjudicating Authority.

The salient amendments affected by the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 are:

(i) The amendments specify the process for (i) sale of corporate debtor as going concern, and (ii) sale of business of corporate debtor as going concern under liquidation. These also provide that where a corporate debtor is sold as a going concern, the liquidation process shall be closed without dissolution of the corporate debtor.

(ii) The amendments require completion of liquidation process within one year of its commencement, notwithstanding pendency of applications for avoidance transactions. These provide a model timeline for each task in the liquidation process. It also specifies a maximum time of 90 days from the order of liquidation for completion of compromise or arrangement, if any, proposed by the stakeholders under section 230 of the Companies Act, 2013. These will ensure that liquidation process is closed at the earliest.

(iii) The amendments require the financial creditors, who are financial institutions, to contribute towards the liquidation cost, where the corporate debtor does not have adequate liquid resources to complete liquidation, in proportion to the financial debts owed to them by the corporate debtor, in case the CoC did not approve a plan for such contribution during corporate insolvency resolution process.  However, such contribution along with interest at bank rate thereon shall form part of liquidation cost, which is paid in priority.

(iv) The amendments provide for constitution of a Stakeholders’ Consultation Committee having representation from secured financial creditors, unsecured financial creditors, workmen and employees, government, other operational creditors, and shareholder/partners to advice the liquidator on matters relating to sale. However, the advice of this committee is not binding on the liquidator.

(v) The amendments require that a stakeholder may submit its claim or update its claim submitted during the corporate insolvency resolution process, as on the liquidation commencement date. Along with submission of claim, a secured creditor shall inform the liquidator of its decision to relinquish its security interest to liquidation estate or to realise its security interest.

(vi) The amendments have introduced a comprehensive compliance certificate to be submitted along with the final report to the Adjudicating Authority.

The amendment Regulations are effective from today. These are available at http://www.mca.gov.in and http://www.ibbi.gov.in.

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Direct Selling Legislation

PIB press release dated 26th July, 2019

Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs notified the Direct Selling Guidelines, 2016 in the Gazette of India on 26.10.2016 as guiding principles for State Governments to consider regulating the business of direct selling and multi-level marketing and strengthen the existing regulatory mechanism on direct selling and multi-level marketing for preventing fraud and protecting the legitimate rights and interests of consumers. State Governments/Union Territories, being enforcement agencies, may take necessary action to implement these guidelines. In terms of the Direct Selling Guidelines, 2016, State Governments will set up a mechanism to monitor/supervise the activities of direct sellers, direct selling entities regarding compliance with the guidelines. Besides, the Consumer Protection Bill, 2019 has been introduced in Lok Sabha on 8th July, 2019 which seeks to provide the measures to be taken by the Central Government to prevent unfair trade practices in direct selling.

 

In terms of the Direct Selling Guidelines, 2016, no person or entity will participate in money circulation scheme in the garb of direct selling business. Ministry of Finance, Department of Financial Services has intimated that there is no information available with them that law enforcement agencies are wrongfully booking genuine direct selling firms under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978.

 

This information was given in a written reply by the Minister of State for   Consumer Affairs, Food & Public Distribution, Shri Danve Raosaheb Dadarao in the Rajya Sabha today.

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